US President Donald Trump has raised the issue of replacing Federal Reserve Chair Jerome Powell again, provoking heated discussions in traditional and cryptocurrency markets.
We analyze what will happen to Bitcoin $BTC if the president actually sends the Fed chair into retirement. The consequences of this move will go far beyond the segment of traditional assets.
Trump's plan to appoint a new Fed chair has shaken the markets
On June 6, Donald Trump announced that he would soon present a candidate for the position of Fed chair, although the term of the current head Jerome Powell expires only in May 2026. Powell's resignation could be a serious shock to US monetary policy: markets fear that the president will appoint his "puppet" to this position.
Two months ago, Trump's first statement about firing Powell led to a drop in the US dollar index (DXY) and a sharp rise in Bitcoin. The market reacted to the prospect of a loosening of monetary policy and a potential decrease in the Fed's independence.
At the end of April, Trump softened his position, stating that he did not intend to fire him... He just wanted him to lower interest rates more actively. Bitcoin corrected in response to these comments, demonstrating a close connection between crypto assets and Fed policy.
"This could have a significant impact on the markets. Both a rise in cryptocurrencies and a significant drop are possible," noted Ranandjay Singh, founder of TodayCrypto.
Can Trump fire Powell?
The Federal Reserve Act significantly limits the possibilities for the early removal of the Fed chair. Dismissal is allowed only "for cause," which is traditionally interpreted as ethical violations or abuse of power.
Scott Bessen of Key Square Capital, serving as the US Secretary of the Treasury, proposed an alternative approach: appoint a successor to Powell before his term expires in 2026.
"The nominee will have to wait to lead the Federal Open Market Committee, which sets one of the key interest rates in the country... however, the leadership, forecasts, and possible criticism of the Fed's actions by this person will have a significant impact on the financial markets," explains John Herold.
Experts warn that an attempt to fire Powell without valid reasons could provoke a serious legal crisis and cause chaos in the financial markets.
Conclusion
Bitcoin has evolved from a simple inflation hedge to insurance against risks in the traditional finance (TradFi) segment and political interference in the Treasury's operations. The threat of the Fed chair's resignation relates to treasury risks, so Bitcoin will react as a safe-haven asset, noted Jeff Kendrick, head of research in the digital asset market at Standard Chartered.
A potential change in Fed leadership could be a catalyst not only for Bitcoin aiming for the $105,000 mark but also for altcoins.
"This is important news for altcoin holders. The main reason for the delay in the alt season is the QT program and the slow rate of decrease. But everything could change soon," predicts analyst Cas Abbé.
If Trump appoints someone to the position of Fed chair who supports his policies, rates will decrease faster, which will increase liquidity in the market and stimulate the growth of cryptocurrency assets. However, as warned by World of Finance, this day will become a black swan on a global scale.
